European startups weigh relocation amid funding and skills gaps

Nearly four in 10 European startups would consider leaving the region to scale, and the share was over half among the fastest-growing startups.[1] Startups said they were reconsidering locations because they wanted funding and support and were not getting enough funding in Europe.[1] Randery warned that relocation could lead to a mass exit of some of the region’s most promising new ventures.[1] These findings describe willingness to consider a move, not a count of startups that have already relocated.[1]

Randery said European businesses told AWS they could spend as much as 40 cents of every euro on regulatory compliance rather than technology.[1] Reuters said Europe’s AI progress has been limited by the EU AI Act, which it described as widely seen as the world’s most stringent AI regulatory framework, as well as energy and grid constraints.[1] Reuters also cited tighter regulation, energy constraints and data-privacy concerns in explaining Europe’s difficulty closing its AI gap with the United States and China.[1] The compliance figure is what businesses told AWS they could spend, not a reported average across all firms.[1]

More than half of businesses in Europe were using AI, Randery said, but only one in five had a clear AI strategy, an AI governance model and investment in processes to fundamentally reshape operations.[1] She said European businesses should invest in AI inference.[1] Reuters described inference as running trained models to generate outputs—the stage when models are deployed for real-world use.[1] Reuters also reported that Europe had produced few frontier AI models and relied on companies including OpenAI and Anthropic.[1]